New Tax Rates on Electric Cars Revealed

Jerusalem, 12 November, 2025 (TPS-IL) — The Israel Tax Authority published for public comment orders determining the reduced purchase tax rate for electric vehicles will be 52% in 2026, up to a benefit ceiling of 30,000 Shekels ($9,300), compared to 45% up to a benefit ceiling of 35,000 Shekels ($10,900) in 2025. In order to subsidize the tax reduction on electric vehicles, it is proposed that the outline that was in effect in 2025 be extended, according to which tax reductions for the green score of non-electric vehicles will be reduced by a fixed amount of 750 Shekels, and tax increases for the green score of non-electric vehicles will be expanded by a fixed amount of 750 Shekels.

The orders also propose that the luxury tax that currently applies to vehicles with a consumer price of more than 300,000 Shekels ($93,000), which will expire on January 1, 2026, will become a permanent tax.

In addition, it is proposed to extend the validity of the reduction amounts in the use value of attached vehicles of the electric, hybrid and plug-in type. In accordance with the Income Tax Ordinance, tax must be charged for the use value of an attached vehicle provided to an employee from the workplace. The determination of the use value is based on 2.48% of the price of a new vehicle (for vehicles registered for traffic after January 1, 2010).